Hi All ,

I hear that the Blue Ridge Phase II is not doing well. Anyone having any updates on this scheme? What is the possession date for phase II? Heard a lot of cancellations have been happening there any idea please update.

Thanks in advance.
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  • The funny thing is You are again contradicting your own point.
    You said that rent is 1/600 of the cost of property in Blue Ridge, still you insist that buying in resale and paying full interest on day 1 of 100% of the loan amount is better than paying for a staggered loan disbursed over 6 years along with rental outgo

    Calculations as per your data:
    rent is 1.5% (with hra savings) of 100% of capital value compared to 10.5% interest on 80% value of property. that means every year a loss of (10.5 *0.8 - 2)% on 80L - 50k tax savings on interest repayments
    = 6.4% of full value of 80L - 50k tax savings on interest repayments
    = 5.12 Lakhs - 50k tax savings on interest
    = 4.62L Loss per year


    And above all you are still taking it personally... I have no intention of getting drawn into a one-on-one confrontation with anyone.

    If you believe that the salaries would remain exactly the same for 6 years, but rents would increase at 10% each year on an increasing base Y-O-Y in Blue Ridge. well I would suggest let us each keep our own views which we are so convinced of. I have nothing to prove to you.

    of course, All the real estate investors are stupid with no financial sense, that they prefer to put money in underconstruction or prelaunch, rather than buying in over tens of thousands of ready to move flat inventory in Pune.

    I am sure the general viewers of this thread will find some value in the analysis presented in earlier pages. At least it would give people an idea on how an investor makes money in real estate and how an end-user can use financial engineering in the same manner to reap serious gains like an investor, while able to own and stay in blue ridge at the same time.

    I had presented the analysis on this thread here, because it is targeted at Blue Ridge, as it is a unique township project in the middle of its lifecycle, with no project risk and a defined trend of capital values and rentals and overall inventory overhang data. That means this analysis may not hold true for many other projects in Pune.


    Rest everything depends on one's financial assumptions.
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  • Originally Posted by humble_guy

    I am sure the general viewers of this thread will find some value in the analysis presented in earlier pages. At least it would give people an idea on how an investor makes money in real estate and how an end-user can use financial engineering in the same manner to reap serious gains like an investor, while able to own and stay in blue ridge at the same time.


    1. Any CLP property will give better return than ready to move property as long as 1) CLP price < ready to move price at the time of purchase and 2) property doest see a price drop


    if second condition is not met then this leverage can produce extreme negative returns too

    more the time taken to complete property ...more the % returns in CLP

    builders have become smart over the years and now most CLP plans take 50% plus in first year itself and that has made CLP plans less attractive

    also there were times (like in NCR around 2010 when CLP plans had overall cost less than 20-30% than that of RTM properties but somehow Pune builders never had such steep discounts)...

    when I came to Pune...I too was very surprised to see that BR new and old towers were priced same....in such a situation CLPs are not that attractive...but BR has almost zero execution risk and hence they are able to afford this lack of dscount for CLP plans

    end of the day...in all this debate, we should not miss that demand supply decides pricing of all components of an asset class


    2. Any property with part debt (loan) will give better ROE as long as annual property price rise % > post tax cost of debt

    this condition is probably tough to be met in next few years due to ongoing RE slump

    ...........
    Also realize that extra returns in CLP doesnt come free...it is essentially a compensation for taking execution risk

    in that sense people buying in CLP (popularly known as investors) should be seen as the people who provide risk capital to this unorganized industry and they fill a very big gap between cash starved builders (RE indutsry is not classified as infra sector and cost of fund for builders from baking channeles is very high) and risk averse end-users

    in this scheme of things...anyone should not have a bad feeling about other set of people...everyone has a role to play...
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  • Baruch: Thanks for providing a balanced view. The decision to buy under construction and stay on rent, or to buy ready possession, depends on risk appetite and utility of available funds. Both ways are profitable, one in terms of money, other in terms of stability and lowered risk.
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  • New way of analysis presented below.
    (Like earlier analysis, this is targeted at Blue Ridge only, as the project completion risk is not there, and many other unique project related factors.)


    The main misconception among end-users is that if buying in resale, they are the owners of the property. It is wrong. The bank is the owner of the property and you are paying rent to the bank for the money it has lent you.

    This is the crux of all irrelevant emotional attachment with resales and also the main cause of financial losses.

    When a person buys a home with 80% homeloan, then they are the owners of only the 20% of the property that is self funded.
    When a person books an underconstruction property with 20% downpayment, they are the owners of 20% of the property.

    Now in the case of resale :
    In year 0: bank owns 80% and you own 20%
    at the end of year 1: bank owns 78.5% and you own 21.5%
    at the end of year 2: bank owns 76.7% and you own 23.3%
    at the end of year 3: bank owns 74.8% and you own 25.2%
    at the end of year 4: bank owns 72.7% and you own 27.3%
    at the end of year 5: bank owns 70.3% and you own 29.7%
    at the end of year 6: bank still owns 68% and you own 32% only.
    overall equity of 32% of 80L = 25.6 L

    So eventually what is the use of paying emi of 60k x 12 x 6 = 43 Lakhs to save on rent of say 8-12 Lakhs for 6 years, just to get 32% of the ownership of the house which is only 5.6L more than what you initially had 6 years ago.

    Whereas, underconstruction booking along with staying in rent in Blue Ridge would result in:
    initial corpus= 20L
    savings on interest - rental costs = 43-11 = 32L

    Overall equity = 52L in 80L total cost
    which is equal to 65% of total flat when it is ready for possession at the end of year 6.

    So you own 65% of your own house in scenario 2 compared with the 32% ownership in scenario 1, even with the most conservative of estimates.

    And also, the rate of appreciation of both the properties would be the same, hence at the end of 6 years the market value of the both flats would be the same, there is a strong upside possibility that the newer flat may be worth more than the 6-8 year old flat.And also, the rate of appreciation of both the properties would be the same, hence at the end of 6 years the market value of the both flats would be the same, there is a strong upside possibility that the newer flat may be worth more than the 6-8 year old flat.And also, the rate of appreciation of both the properties would be the same, hence at the end of 6 years the market value of the both flats would be the same, there is a strong upside possibility that the newer flat may be worth more than the 6-8 year old flat.And also, the rate of appreciation of both the properties would be the same, hence at the end of 6 years the market value of the both flats would be the same, there is a strong upside possibility that the newer flat may be worth more than the 6-8 year old flat.
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  • @humble_guy, @Truth,

    With given prices, it does not really matter whether to buy at CLP or ready possession, whether you are investor or end user :)
    1.3 Cr for BR is not at all justified.
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  • Originally Posted by Sat234
    @humble_guy, @Truth,

    With given prices, it does not really matter whether to buy at CLP or ready possession, whether you are investor or end user :)
    1.3 Cr for BR is not at all justified.


    Justification isn't really key here. Some people feel that a Rs. 60,000 price tag for an iPhone is not justified, however, there are people in the market who are buying it so there is no reason why the product price will be lowered by the seller.

    As Bharuch said, at a high level, it's a simple matter of supply and demand :-)

    Sent from my GT-I9100 using Tapatalk 2
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  • Originally Posted by humble_guy
    New way of analysis presented below.
    (Like earlier analysis, this is targeted at Blue Ridge only, as the project completion risk is not there, and many other unique project related factors.)


    The main misconception among end-users is that if buying in resale, they are the owners of the property. It is wrong. The bank is the owner of the property and you are paying rent to the bank for the money it has lent you.

    This is the crux of all irrelevant emotional attachment with resales and also the main cause of financial losses.

    When a person buys a home with 80% homeloan, then they are the owners of only the 20% of the property that is self funded.
    When a person books an underconstruction property with 20% downpayment, they are the owners of 20% of the property.

    Now in the case of resale :
    In year 0: bank owns 80% and you own 20%
    at the end of year 1: bank owns 78.5% and you own 21.5%
    at the end of year 2: bank owns 76.7% and you own 23.3%
    at the end of year 3: bank owns 74.8% and you own 25.2%
    at the end of year 4: bank owns 72.7% and you own 27.3%
    at the end of year 5: bank owns 70.3% and you own 29.7%
    at the end of year 6: bank still owns 68% and you own 32% only.
    overall equity of 32% of 80L = 25.6 L

    So eventually what is the use of paying emi of 60k x 12 x 6 = 43 Lakhs to save on rent of say 8-12 Lakhs for 6 years, just to get 32% of the ownership of the house which is only 5.6L more than what you initially had 6 years ago.

    Whereas, underconstruction booking along with staying in rent in Blue Ridge would result in:
    initial corpus= 20L
    savings on interest - rental costs = 43-11 = 32L

    Overall equity = 52L in 80L total cost
    which is equal to 65% of total flat when it is ready for possession at the end of year 6.

    So you own 65% of your own house in scenario 2 compared with the 32% ownership in scenario 1, even with the most conservative of estimates.

    And also, the rate of appreciation of both the properties would be the same, hence at the end of 6 years the market value of the both flats would be the same, there is a strong upside possibility that the newer flat may be worth more than the 6-8 year old flat.

    I agree with you that staying on rent and buying in future towers is a better financial decision, because the rents are CRAP, not just in BR, everywhere. But pls note they take 80% in first 1.5 years so it's not as profitable as one might think. Plus you have the risk of possible compromise in quality, delay in possession etc. also they dont price existing and new differently but with the slowdown becoming more pronounce, one shouldn't be surprised to see discounts on new, and ready posession demanding premium, and that's justified too - afterall the existing 1 cr se jaada rokda ek saath diya hai :)

    I agree with you that staying on rent and buying in future towers is a better financial decision, because the rents are CRAP, not just in BR, everywhere. But pls note they take 80% in first 1.5 years so it's not as profitable as one might think. Plus you have the risk of possible compromise in quality, delay in possession etc. also they dont price existing and new differently but with the slowdown becoming more pronounce, one shouldn't be surprised to see discounts on new, and ready posession demanding premium, and that's justified too - afterall the existing 1 cr se jaada rokda ek saath diya hai :)

    I agree with you that staying on rent and buying in future towers is a better financial decision, because the rents are CRAP, not just in BR, everywhere. But pls note they take 80% in first 1.5 years so it's not as profitable as one might think. Plus you have the risk of possible compromise in quality, delay in possession etc. also they dont price existing and new differently but with the slowdown becoming more pronounce, one shouldn't be surprised to see discounts on new, and ready posession demanding premium, and that's justified too - afterall the existing 1 cr se jaada rokda ek saath diya hai :)

    I agree with you that staying on rent and buying in future towers is a better financial decision, because the rents are CRAP, not just in BR, everywhere. But pls note they take 80% in first 1.5 years so it's not as profitable as one might think. Plus you have the risk of possible compromise in quality, delay in possession etc. also they dont price existing and new differently but with the slowdown becoming more pronounce, one shouldn't be surprised to see discounts on new, and ready posession demanding premium, and that's justified too - afterall the existing 1 cr se jaada rokda ek saath diya hai :)

    I agree with you that staying on rent and buying in future towers is a better financial decision, because the rents are CRAP, not just in BR, everywhere. But pls note they take 80% in first 1.5 years so it's not as profitable as one might think. Plus you have the risk of possible compromise in quality, delay in possession etc. also they dont price existing and new differently but with the slowdown becoming more pronounce, one shouldn't be surprised to see discounts on new, and ready posession demanding premium, and that's justified too - afterall the existing 1 cr se jaada rokda ek saath diya hai :)

    I agree with you that staying on rent and buying in future towers is a better financial decision, because the rents are CRAP, not just in BR, everywhere. But pls note they take 80% in first 1.5 years so it's not as profitable as one might think. Plus you have the risk of possible compromise in quality, delay in possession etc. also they dont price existing and new differently but with the slowdown becoming more pronounce, one shouldn't be surprised to see discounts on new, and ready posession demanding premium, and that's justified too - afterall the existing 1 cr se jaada rokda ek saath diya hai :)
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  • Originally Posted by RP Pune
    But pls note they take 80% in first 1.5 years so it's not as profitable as one might think.


    80% in first 1.5 years! This will mean the buyer will pay almost full EMI from day 1, whether or not he avails the EMI holiday period. Add to this the uncertainty and possibility of delayed possession, I think the risk premium should be high in such cases.
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  • @TheTruth

    >> 80% in first 1.5 years! This will mean the buyer will pay almost full EMI from day 1, whether or not he avails the EMI holiday period.

    It is generally more than 80% and generally in less than 1.5 years !! RP_Pune has given the lower estimate, it can be higher.

    Plaster brickwork tiling etc are the last 10-15% and they drag it on for 2 years. The slabs are put up within a year, and you have already paid the slab wise payment upto 85-90% in one year. Ek saal kaise jaata hai, pata bhi nahi chalta hai.

    I am unaware of how EMI holiday thing works. I was under the impression that you pay EMI for whatever amount that has been disbursed. Full EMI starts when bank has disbursed the loan amount completely.

    @bigbloodyt

    >> Justification isn't really key here.

    True.
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  • Most banks will have 18 months of EMI holiday where we can pay simple interest on disbursed amount. SBI Yuva loan has this period extended till 36 months. However at the end of this period, irrespective of how much loan is disbursed, full EMI is charged. Out of this EMI, interest on the borrowed amount is subtracted and rest is paid towards premium. So humble_guy is right in saying that in case when a large portion of loan is not disbursed, less interest is charged and thus loan is paid out faster.

    However, if they are taking 80% in first 1.5 years, even the simple interest comes up to be monthly 60,000, and one might as well pay the full EMI.

    Bank doesn't wait for full disbursement of loan for starting full EMI. People sometimes don't avail full loan because they manage to cough up money from other sources. So banks start charging full EMI as per schedule, and the interest and principal parts are automatically calculated on disbursed loan amount.
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  • Originally Posted by Sat234
    @TheTruth

    >> 80% in first 1.5 years! This will mean the buyer will pay almost full EMI from day 1, whether or not he avails the EMI holiday period.

    It is generally more than 80% and generally in less than 1.5 years !! RP_Pune has given the lower estimate, it can be higher.

    Plaster brickwork tiling etc are the last 10-15% and they drag it on for 2 years. The slabs are put up within a year, and you have already paid the slab wise payment upto 85-90% in one year. Ek saal kaise jaata hai, pata bhi nahi chalta hai.

    I am unaware of how EMI holiday thing works. I was under the impression that you pay EMI for whatever amount that has been disbursed. Full EMI starts when bank has disbursed the loan amount completely.

    @bigbloodyt

    >> Justification isn't really key here.

    True.


    True. I have myself paid 80% in less than a year and a lot of time still to go. LOL. I knew I was giving a conservative figure as I thought based on gungaan from others that Paranjape would be a bit better than the lowest forms of life we see everywhere else in Pune.

    So after a year, you in the same boat as ready possession guy as you pay interest on 80% and your rent would be the same amount as on the leftover 20% - in a typically priced 2BHK. You will save some money in the first year though as rent < interest on staggered 80% payment.

    Both options have advantages/disadvantages. If one need for self use straightaway, I am more inclined for ready possession as you buy what you see, can negotiate really hard due to current slowdown and as the guy selling would have bought at severely low rates. You also avoid any possible risk to quality in underconstruction.

    This is how EMI works:

    1. Yes, you pay EMI for whatever amount that has been disbursed. The EMI includes interest + principle repayment. This is the default option.
    2. On special request, you can put your loan on pre-emi, where you pay interest only. Your pre-emi increases when you do subsequent disbursements - as the interest increases. Some banks allow this until possession, some other do this for limited time e.g. 12/18 months.
    3. You can opt to pay full EMI from day 1. e.g. sanctioned amount - 20 lacs. Full EMI - 22k/nth. Disbursed - 10 lacs, but you pay 22k from the day 1 itself. This way you pay principle faster. Private banks discourage this as they earn less interest, but SBI encourage to go for this option.
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  • Originally Posted by humble_guy
    The funny thing is You are again contradicting your own point.
    You said that rent is 1/600 of the cost of property in Blue Ridge, still you insist that buying in resale and paying full interest on day 1 of 100% of the loan amount is better than paying for a staggered loan disbursed over 6 years along with rental outgo

    Calculations as per your data:
    rent is 1.5% (with hra savings) of 100% of capital value compared to 10.5% interest on 80% value of property. that means every year a loss of (10.5 *0.8 - 2)% on 80L - 50k tax savings on interest repayments
    = 6.4% of full value of 80L - 50k tax savings on interest repayments
    = 5.12 Lakhs - 50k tax savings on interest
    = 4.62L Loss per year


    And above all you are still taking it personally... I have no intention of getting drawn into a one-on-one confrontation with anyone.

    If you believe that the salaries would remain exactly the same for 6 years, but rents would increase at 10% each year on an increasing base Y-O-Y in Blue Ridge. well I would suggest let us each keep our own views which we are so convinced of. I have nothing to prove to you.

    of course, All the real estate investors are stupid with no financial sense, that they prefer to put money in underconstruction or prelaunch, rather than buying in over tens of thousands of ready to move flat inventory in Pune.

    I am sure the general viewers of this thread will find some value in the analysis presented in earlier pages. At least it would give people an idea on how an investor makes money in real estate and how an end-user can use financial engineering in the same manner to reap serious gains like an investor, while able to own and stay in blue ridge at the same time.

    I had presented the analysis on this thread here, because it is targeted at Blue Ridge, as it is a unique township project in the middle of its lifecycle, with no project risk and a defined trend of capital values and rentals and overall inventory overhang data. That means this analysis may not hold true for many other projects in Pune.


    Rest everything depends on one's financial assumptions.


    How anyone can be sure that there is no project risk in any under construction property. It may be only personal assumption(favorable to builder).
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  • Originally Posted by TheTruth
    Bank doesn't wait for full disbursement of loan for starting full EMI. People sometimes don't avail full loan because they manage to cough up money from other sources. So banks start charging full EMI as per schedule, and the interest and principal parts are automatically calculated on disbursed loan amount.


    This is not a general rule. The general rule is EMI based on disbursed amount. e.g. 32k (28k int + 4k principle) on say 28 lacs disbursement. Fe months later, part disbursement of 8 lacs, so your EMI will change to 41k (35k int + 6k principle) on the 36 lacs disbursed amount.
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  • some people are saying that in under construction -
    you pay ~80 % in first year itself
    and remaining ~20% is dragged for 2 more years

    i think this is bit exaggeration. thoda hisab se lagao yaar.

    i'd say -
    ~50% in first year
    ~40% in 2nd year
    ~10% in 3rd year
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  • Originally Posted by garibaadmi
    some people are saying that in under construction -
    you pay ~80 % in first year itself
    and remaining ~20% is dragged for 2 more years

    i think this is bit exaggeration. thoda hisab se lagao yaar.

    i'd say -
    ~50% in first year
    ~40% in 2nd year
    ~10% in 3rd year


    In case of BR....I paid 10% in 2012....15% in 2013....

    expected payments

    35% in 2014, 25% in 2015, 5% in 2016 and 10% in 2017

    Such long waiting period is naturally not advisable for those who are buying their first home

    while delay on one hand is frustrating but it improves ROE dramatically....and thats helpful in a dull market like this

    but then I paid 5200 ( in Jul 2013) as login price and waited for new towers to be launched even though I had made my mind for BR when old RTM towers were available 4500 ( in Mar 2012)...there was flat choice angle too...I wanted lower + GC facing floors...I believe mine was first check in 21-24 cluster so I got all flats as choice...
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